Coronavirus: Aston Martin and Lookers cut 2,000 jobs as car sales plummet

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Social distancing signs at the Trident Honda car dealership, Ottershaw in Surrey, England. (Kirsty Wigglesworth/AP)

Car manufacturer Aston Martin (AML.L) and dealership Lookers (LOOK.L) have both announced job cuts amid a slump in demand for vehicles.

Aston Martin said on Thursday it was starting consultations on cutting 500 jobs as part of plans to save £10m ($12.5m) in costs. It comes shortly after the arrival of a new chief executive who is hoping to turnaround the struggling business.

Lookers, meanwhile, said it was cutting 1,500 jobs and closing 12 dealerships in a bid to save £50m a year. Looker said the cuts were “necessary in the current environment to sustain and protect” the business.

“We are having to reflect on the outlook for the group and how we must adapt to ensure a positive future in what is likely to remain an uncertain economic and industry environment,” Lookers chief executive Mark Raban said.

Shares in Aston Martin dropped by 9.5% on the news, while Lookers rose 10%.

News of the redundancies came as new data pointed to a historic slump in car sales. Data from the Society of Motor Manufacturers and Traders (SMMT) showed new car sales fell by 89% in May, with just 20,247 new cars registered last month. Sales are down 50% so far this year.

Car dealerships were closed for the month of May due to the COVID-19 pandemic but were allowed to reopen on Monday (1 June). Industry experts are hopeful that sales will bounce back.

“The huge release of pent-up demand from the past few months will boost the market in the short-term, giving the industry time to work toward longer-term recovery,” said Seán Kemple, director of sales at Close Brothers Motor Finance.

Ian Plummer, commercial director at Auto Trader, said there was a “huge opportunity for the industry to help kick-start the country’s wider economy.”

However, the auto industry was struggling even before the COVID-19 pandemic. The transition to electric vehicles pushed up costs for manufacturers, while the rise of car sharing services such as Uber had dented demand.

Last week French car giant Renault announced plans to cut 15,000 jobs worldwide as part of a global restructuring (RNO.PA).